Economist Dan Davies explains why AI won't cause mass unemployment

Economist and writer Dan Davies is offering a refreshing reality check for those spooked by the rise of artificial intelligence.

In a compelling new argument, he suggests that the fear of mass job losses stems from a fundamental misunderstanding of how businesses and economies actually function.

Davies posits that simply using machines to mimic human tasks is not "real innovation," and history shows that markets have a knack for self-correction.

His logic is grounded in the "bottleneck" theory of productivity. While tools like large language models can certainly speed up specific chores—such as building a financial model—this efficiency rarely leads to redundancies.

Instead, it shifts the workload. When one technical hurdle is cleared, a new one invariably appears, requiring human expertise to manage more sophisticated and ambitious projects.

Consequently, companies often find themselves hiring more staff to handle this increased operational complexity rather than letting them go.

Furthermore, Davies points out a vital economic catch-22: businesses need customers with disposable income. If automation truly wiped out the global workforce, consumer demand would evaporate, making further investment in AI pointless for companies.

Rather than making humans obsolete, he believes AI will strip away the "drudgery" of routine administrative work. By making office life less tedious and more productive, the technology is likely to change the nature of our roles rather than eliminate them.

In the long run, capable people remain a profitable asset that the market will always find a way to utilise.